JRL Group profit halves despite turnover growth

Profit at JRL Group fell more than 50% to the lowest level it has seen for eight years after a "difficult year" in 2022, according to accounts for the main contractor and specialist builder.

JRL Group, which is the group entity for both groundworks and concrete frame specialist J Reddington and main contractor Midguard, reported pre-tax profit of £13.3m for the 2022 calendar year, just under half the £26.8m reported in 2021, despite sharply rising revenue.

The firm said turnover grew by 25% to £761m, its highest ever. However, the pre-tax profit figure was its lowest since it reported a £3.9m return in 2015, and the first time since that year it has fallen below a 2% pre-tax margin.

Within the group figures, the firm said J Reddington itself made a pre-tax loss on £1.6m on £396m turnover, while Midguard made a healthy profit of £25.3m on turnover of £536.3m.

The firm also includes a number of other major specialist contracting subsidiaries, covering everything from crane hire, plant and logistics, drylining, civil engineering and M&E contracting. The results showed that JRL Group's unitised facades contractor, McMullen Facades, reported a significant pre-tax loss of £21.8m after expanding turnover from £65.2m in the prior year to £128m.

JRL said McMullen had experienced "poor performing contracts and inflationary pressures" and that in response to the loss, "greater resources and enhanced design capabilities are now in place", alongside an "increased focus on cost control and efficiencies".

Chairman John Reddington said 2022 was "a difficult year for the construction industry" with "inflation at an all-time high".

However, he added that while JRL's in-house delivery model couldn't completely protect the firm from the impact of inflation, it "does save us from supply chain failures and excessive mark-ups".

Reddington said JRL Group was now accessing new and more economic markets for materials to reduce costs, and had invested in a modular factory to further address cost pressures. He said: "Inflation has stabilised, we have a healthy orderbook and with a motivated team we look forward to better results in the coming years."

The results statement said the firm was pleased with the "strengthening of the group's financial position", with the net assets on the balance sheet increasing to £142m, from £130m last year. However, the accounts also showed that net debt increased to £64.2m, from £14.6m in 2021. 

Source; Building